Committee agrees on luxury tax draft

IN PRINCIPLE:The minister of finance said a proposed mild revision to the luxury tax should not affect the real-estate market too severely and is a step toward tax fairness

By Amy Su / Staff reporter

The legislature’s Finance Committee yesterday agreed to the Ministry of Finance’s revised draft of the proposed luxury tax, which would not expand the implementation to real-estate transactions resold within three years from the two years currently adopted.

The ministry’s proposal focuses on expanding the scope of the luxury tax to apply to industrial estates which are not in urban regions, in a bid to curb the rise of speculative transactions involving this kind of property.

For those trading in an old property for a new one, the ministry would carefully examine whether the real estate in question is used as a home for private use to see if property sellers should be exempted from the luxury tax.

Minister of Finance Chang Sheng-ford (張盛和) said the proposal is only a mild revision to the luxury tax and should not affect the real-estate market too much.

It is still a step toward the spirit of fairness, he said.

“It would be better if the plan to revise the luxury tax was a step-by-step process,” Chang said in a question-and-answer session at the committee.

The government introduced the luxury tax — also known as the special sales tax on selected goods and services — in June 2011, imposing a 15 percent luxury tax on properties resold within one year of purchase and a 10 percent tax on those resold within two years.

A 10 percent tax will also be levied on luxury cars, yachts and private aircraft with a price tag exceeding NT$3 million (US$98,930), as well as club memberships, designer furniture and fur products valued at more than NT$500,000.

As of the end of last month, the luxury tax generated a total of NT$12.3 billion for the nation’s coffers, with NT$8.3 billion coming from real-estate transactions and NT$3.9 billion from luxury car purchases.

Although most lawmakers in the Finance Committee supported the ministry’s proposal, some legislators urged the ministry to cancel the implementation on sales of yachts to help support the new industry in Taiwan and drive up domestic demand.

However, Chang said it would not be appropriate to opt out of taxing buyers of these luxurious goods due to the principle of fairness.

Following the passing of the proposal drafted by the ministry, Democratic Progressive Party Legislator Lee Ying-yuan (李應元), who is the convener of the Finance Committee, announced the proposal would be kept in the committee for a while, in case of further discussions.

The committee also asked the Ministry of Economic Affairs to research possible subsidies to yachtmakers in Taiwan as another way to support the new industry.